When World Sneezes, Port Gets A Cold

International Crises Affecting Export Volume

No matter what you call it, far-flung economic troubles have a way of infecting everyone in today's global economy.

Think of the port, then, as Virginia's mucous membrane - the first place to exhibit symptoms of infection locally.

The trouble first flared here in mid-1998, when cargo volume was flat compared with the previous year. Then in August, the port's monthly general cargo volume, 917,759 tons, failed to top year-earlier volume for the first time since April 1996.

Not surprisingly, the international crises have afflicted the port most in export volume.

The equation is simple: Devalued foreign currencies hurt foreign buying power. That means it takes more money to buy U.S.-milled paper, the port's top export, this year than it did last year.

At the same time, goods produced overseas, particularly in Asia, are cheaper now. So Americans can get more auto parts - the top import - for their dollars.

The resulting trade imbalance has meant shipping containers coming into Hampton Roads and other ports full - and going back empty. And that translates into the lowest export shipping rates in years.

Shipping lines have cut rates because the containers have to get back to where they came from, and it's better to make a little money than none at all.

The flip side: Shipping lines are making some of it back on higher rates for cargo coming to the United States. With Asian countries trying to export their way out of their crisis - dumping cheap consumer products and steel on the U.S. market - Asian exporters are willing to pay higher rates to ship their products now. That's why U.S. consumers haven't experienced all the benefits that one might expect from a strong dollar.

But for the port industry, the export/import equation isn't one-for-one. Shipping lines take a hit, shipping agents take a hit and shipping terminals take a hit. All depend on cargo traffic for their livelihood.

Hampton Roads has suffered less than many other ports, in large part because its chief trading partners are European. But the port has been putting a greater emphasis on trade with South America - particularly Brazil, the port's second-largest export customer and third-largest in import volume. And economies there are the latest scourge .

As 1998 came to a close, the port's volume had bounced back slightly from summer, but its 4.8 percent annual growth through October was still less than half of 1997's 11.5 percent.

The sobering fact is that the port's lifeblood for the past decade has been foreign trade and booming emerging markets. As those markets contract, the port is in for a bit of economic hypertension.

- Dennis O'Brien can be reached at 247-4791 or by e-mail at dobrien@dailypress.com

DELICATE BALANCE

Nations with the Asian flu are boosting exports to cure their ailing economies, while their weak currencies dampend appetites for U.S. goods. The result: a shift in the balance of trade.